Full-year Income from Operations grew almost 15% driving strong growth
in Net Cash Provided by Operations

The Company’s Core Solid Waste Business is the Strongest in Two Decades

HOUSTON--(BUSINESS WIRE)--Feb. 15, 2018--
Waste Management, Inc. (NYSE: WM) today announced financial results for
its quarter ended December 31, 2017. Revenues for the fourth quarter of
2017 were $3.65 billion, compared with $3.46 billion for the same 2016
period. Net income for the quarter was $903 million, or $2.06 per
diluted share, compared with net income of $335 million, or $0.75 per
diluted share, for the fourth quarter of 2016.(a) On an
as-adjusted basis, earnings per diluted share were $0.85 for the fourth
quarter of 2017, compared with $0.75 for the fourth quarter of 2016.(b)

The Company’s fourth quarter 2017 results have been adjusted to exclude
a net benefit of $1.21 per diluted share related to the impact of the
Tax Cuts and Jobs Act.(b)

For the full year 2017, the Company reported revenues of $14.5 billion,
compared with $13.6 billion for 2016. Earnings per diluted share were
$4.41 for the full year 2017 compared with $2.65 for the full year 2016.
On an as-adjusted basis, earnings per diluted share were $3.22 for the
full year 2017 versus $2.91 for the full year 2016.(b)

Jim Fish, President and Chief Executive Officer of Waste Management,
commented, “The strong results that we saw through the first nine months
of 2017 continued into the fourth quarter as we saw organic revenue
growth continue to translate into operating EBITDA growth. In the fourth
quarter, we achieved double-digit growth in income from operations,
operating EBITDA, and adjusted earnings per diluted share, and nearly
10% growth in both adjusted income from operations and operating EBITDA.(b)

“Looking at the full year, 2017 was exceptional for Waste Management as
our continued focus on improving core price, adding profitable volume in
a disciplined manner, and controlling costs led to arguably the best
year in the company’s history. Our employees did a great job of
executing our strategy, and we exceeded our expectations for all
financial and operational metrics leading to record cash provided by
operations and adjusted earnings per diluted share.”

KEY HIGHLIGHTS FOR THE FOURTH QUARTER AND THE FULL YEAR 2017

Revenue Growth

In the fourth quarter, overall revenue increased by 5.5%, or $192
million, from the same period in the prior year. The revenue growth
was driven by strong yield and volume growth in the Company’s
collection and disposal business, which contributed $172 million of
the increase. For the full year 2017, overall revenue increased by
6.4%, or $876 million. Yield and volume growth in the Company’s
collection and disposal business increased revenue by $536 million.
Though revenue from the Company’s recycling yield and volume declined
by $25 million on a year-over-year basis in the fourth quarter of
2017, full-year recycling yield and volume contributed $231 million of
revenue growth.

Core price, which consists of price increases net of rollbacks and
fees, excluding the Company’s fuel surcharge, was 4.8%, compared to
5.1% in the fourth quarter of 2016 and 4.7% in the third quarter of
2017. For the full year, core price was 4.8%, compared to 5.0% for the
full year of 2016.(c)

Internal revenue growth from yield for collection and disposal
operations was 2.2% for the fourth quarter and 2.0% for the full year.

Traditional solid waste internal revenue growth from volume was 4.2%
in the fourth quarter of 2017, or 5.0% on a workday adjusted basis.
Total Company internal revenue growth from volume, which includes our
recycling and other ancillary businesses, was 2.6% in the fourth
quarter, or 3.4% on a workday adjusted basis. For the full year 2017,
traditional solid waste internal revenue growth from volume was 2.7%,
or 2.9% on a workday adjusted basis. Total Company volume was 2.1% for
the full year 2017, or 2.3% on a workday adjusted basis.

Recycling

Average recycling commodity prices at the Company’s recycling
facilities were approximately 8.1% lower in the fourth quarter of 2017
compared with the prior year period. Recycling volumes declined 4.8%
in the fourth quarter. Results in the Company’s recycling line of
business declined by $0.03 per diluted share when compared to the
fourth quarter of 2016. For the full year, average recycling commodity
prices at the Company’s recycling facilities were approximately 27.0%
higher and volumes decreased 0.5%. The revenue increase, combined with
reduced operating costs at the Company’s recycling facilities, drove
an almost $0.09 increase in the Company’s earnings per diluted share
for the full year.

Cost Management & Profitability

Operating expenses as a percentage of revenue in the Company’s
traditional solid waste business improved about 120 basis points
during the fourth quarter and 85 basis points for the full year. As a
percent of revenue, total Company operating expenses were 62.0% in the
fourth quarter of 2017, as compared to 62.1% in the fourth quarter of
2016. For the full year, as a percent of revenue, operating expenses
were 62.3% in 2017, as compared to 62.4% for the full year 2016.

As a percent of revenue, SG&A expenses were 10.1% in the fourth
quarter of 2017, compared to 10.9% in the fourth quarter of 2016. For
the full year, as a percent of revenue, SG&A expenses were 10.1%,
compared to 10.4% for the full year 2016.

Operating EBITDA was $1.05 billion for the fourth quarter of 2017 and
$4.01 billion for the full year. On an as-adjusted basis, operating
EBITDA was $1.02 billion for the fourth quarter of 2017, an increase
of $90 million, or 9.7%, from the fourth quarter of 2016. On an
as-adjusted basis, full-year operating EBITDA was $4.0 billion in
2017, an increase of 8.1% when compared with 2016.(b)

Free Cash Flow & Capital Allocation

Net cash provided by operating activities was $790 million in the
fourth quarter and $3.18 billion for the full year. Operating cash
flow increased by $36 million, or 4.8%, for the fourth quarter and
$174 million, or 5.8%, for the full year as a result of strong
operating income growth and working capital improvements offset in
part by a $120 million increase in cash taxes paid.

Capital expenditures were $528 million in the fourth quarter, a $151
million increase from the fourth quarter of 2016, and $1.51 billion
for the full year, a $170 million increase from 2016. These increases
were in line with our expectations as the Company increased its
capital spending to support growth.

Free cash flow was $342 million in the fourth quarter of 2017 compared
to $388 million in the fourth quarter of 2016.(b) Free cash
flow for the full year was $1.77 billion compared to $1.71 billion in
2016.(b)

The Company paid dividends of $184 million to shareholders in the
fourth quarter. For the full year, the Company returned $1.5 billion
to shareholders through $750 million in dividends and $750 million in
share repurchases.

The Company spent $200 million on tuck-in acquisitions of traditional
solid waste businesses during 2017, $120 million of which was spent in
the fourth quarter.

2018 OUTLOOK

The Company announced the following regarding its financial outlook for
2018:

Revenue Growth

Core price is expected to be 4.0% or greater for 2018.(c) Internal
revenue growth from yield on the collection and disposal business is
expected to be 2.0% or greater.

Internal revenue growth from volume is expected to be between 2.0% and
2.2%.

Recycling

With continued commodity pricing pressure and expected cost increases
from efforts to reduce contamination, earnings from the Company’s
recycling operations are expected to decline from the record-high
levels it saw in 2017. The Company currently expects earnings from its
recycling business to decline between $0.08 and $0.10 per diluted
share in 2018 when compared with the prior year, with much of the
decline expected in the first half of 2018.

Cost Management & Profitability

SG&A expenses are expected to be approximately $1.5 billion in 2018.
This is a slight increase from 2017 as the Company plans to invest a
portion of the benefit from lower cash taxes in people and technology.
The Company continues to target SG&A as a percentage of revenue of
about 10%.

Adjusted operating EBITDA is expected to be $4.2 to $4.25 billion for
the full year.(b)

Adjusted earnings per diluted share for 2018 is expected to be between
$3.97 and $4.05, including an anticipated $0.62 earnings per diluted
share benefit from tax reform partially offset by an $0.11 earnings
per diluted share impact from the previously announced retention bonus
for approximately 34,000 of the Company’s employees.(b)

Free Cash Flow & Capital Allocation

Free cash flow for 2018 is projected to be between $1.95 and $2.05
billion.(b)

Capital expenditures are expected to be in the range of $1.6 to $1.7
billion.

The Board of Directors has indicated its intention to increase the
dividend by $0.16, or 9.4%, to $1.86 per share on an annual basis, for
an approximate annual cost of $810 million. The Board must separately
approve and declare each dividend.

The Board of Directors has authorized management to repurchase up to
$1.25 billion of the Company’s common stock.

Impacts of the Tax Cuts and Jobs Act

The Company’s effective tax rate is expected to be approximately 26%.

The Company plans to utilize a portion of its cash tax savings to pay
approximately $65 million in bonuses to approximately 34,000 of its
employees.

Fish concluded, “2017 was a very successful year for Waste Management,
and we expect that 2018 will be just as successful. With the anticipated
reduction in our cash taxes, we are proactively investing in our
front-line employees, technology, and capital equipment to grow our
business and improve customer service. Our employees are hard at work on
executing our 2018 plans, which should position us to continue to grow
our earnings and cash flow in 2018 and beyond.”

For purposes of this press release, all references to “Net
income” refer to the financial statement line items “Net income
attributable to Waste Management, Inc.”

(b)

This press release contains a discussion of non-GAAP
measures, as defined in Regulation G of the Securities Exchange
Act of 1934, as amended. The Company reports its financial results
in compliance with GAAP, but believes that also discussing
non-GAAP measures provides investors with (i) additional,
meaningful comparisons of current results to prior periods’
results by excluding items that the Company does not believe
reflect its fundamental business performance and are not
representative or indicative of its results of operations and (ii)
financial measures the Company uses in the management of its
business. Accordingly, earnings per diluted share, income from
operations, and operating EBITDA have been presented in certain
instances excluding items identified in the reconciliations
provided. The Company defines operating EBITDA as income from
operations before depreciation and amortization; this measure may
not be comparable to similarly titled measures reported by other
companies.

The Company’s projected full year 2018 earnings per diluted
share and operating EBITDA are anticipated to be adjusted to
exclude the effects of events or circumstances in 2018 that are
not representative or indicative of the Company’s results of
operations. Projected GAAP earnings per diluted share and
operating EBITDA for the full year would require information about
the projected impact of future excluded items, including items
that are not currently determinable, but may be significant, such
as asset impairments and one-time items, charges, gains or losses
from divestitures or litigation, or other items. Due to the
uncertainty of the likelihood, amount and timing of any such
items, the Company does not have information available to provide
a quantitative reconciliation of adjusted projected full year
earnings per diluted share, or adjusted projected operating
EBITDA, to the comparable GAAP measure.

The Company also discusses free cash flow and provides a
projection of free cash flow. Free cash flow is a non-GAAP
measure. The Company discusses free cash flow because the Company
believes that it is indicative of its ability to pay its quarterly
dividends, repurchase common stock, fund acquisitions and other
investments and, in the absence of refinancings, to repay its debt
obligations. Free cash flow is not intended to replace “Net cash
provided by operating activities,” which is the most comparable
U.S. GAAP measure. However, the Company believes free cash flow
gives investors useful insight into how the Company views its
liquidity. Nevertheless, the use of free cash flow as a liquidity
measure has material limitations because it excludes certain
expenditures that are required or that the Company has committed
to, such as declared dividend payments and debt service
requirements. The Company defines free cash flow as net cash
provided by operating activities, less capital expenditures, plus
proceeds from divestitures of businesses and other assets (net of
cash divested); this definition may not be comparable to similarly
titled measures reported by other companies.

The quantitative reconciliations of non-GAAP measures used
herein to the most comparable GAAP measures are included in the
accompanying schedules, with the exception of projected earnings
per diluted share and projected operating EBITDA. Non-GAAP
measures should not be considered a substitute for financial
measures presented in accordance with GAAP, and investors are
urged to take into account GAAP measures as well as non-GAAP
measures in evaluating the Company.

(c)

Core price is a performance metric used by management to
evaluate the effectiveness of our pricing strategies; it is not
derived from our financial statements and may not be comparable to
measures presented by other companies. Core price is based on
certain historical assumptions, which may differ from actual
results, to allow for comparability between reporting periods and
to reveal trends in results over time.

The Company will host a conference call at 10:00 AM (Eastern) today to
discuss the fourth quarter and full year 2017 results. Information
contained within this press release will be referenced and should be
considered in conjunction with the call.

The conference call will be webcast live from the Investor Relations
section of Waste Management’s website www.wm.com.
To access the conference call by telephone, please dial (877) 710-6139
approximately 10 minutes prior to the scheduled start of the call. If
you are calling from outside of the United States or Canada, please dial
(706) 643-7398. Please utilize conference ID number 8488065 when
prompted by the conference call operator.

A replay of the conference call will be available on the Company’s
website www.wm.com
and by telephone from approximately 1:00 PM (Eastern) Thursday, February
15, 2018 through 5:00 PM (Eastern) on Thursday, March 1, 2018. To access
the replay telephonically, please dial (855) 859-2056, or from outside
of the United States or Canada dial (404) 537-3406, and use the replay
conference ID number 8488065.

The Company, from time to time, provides estimates of financial
and other data, comments on expectations relating to future periods and
makes statements of opinion, view or belief about current and future
events. This press release contains a number of such forward-looking
statements, including but not limited to all statements under the
heading “2018 Outlook” and statements regarding 2018 earnings per
diluted share and earnings growth; 2018 free cash flow and growth;
future operating EBITDA and growth; future operational performance /
success; future capital expenditures and investments; future tax rates
and use of cash tax savings; and future dividend rates and shares
repurchases. You should view these statements with caution. They are
based on the facts and circumstances known to the Company as of the date
the statements are made. These forward-looking statements are subject to
risks and uncertainties that could cause actual results to be materially
different from those set forth in such forward-looking statements,
including but not limited to, increased competition; pricing actions;
failure to implement our optimization, growth, and cost savings
initiatives and overall business strategy; failure to identify
acquisition targets and negotiate attractive terms; failure to
consummate or integrate such acquisitions; failure to obtain the results
anticipated from acquisitions; environmental and other regulations;
commodity price fluctuations; disposal alternatives and waste diversion;
declining waste volumes; failure to develop and protect new technology;
significant environmental or other incidents resulting in liabilities
and brand damage; weakness in economic conditions; failure to obtain and
maintain necessary permits; labor disruptions; impairment charges; and
negative outcomes of litigation or governmental proceedings. Please also
see the Company’s filings with the SEC, including Part I, Item 1A of the
Company’s most recently filed Annual Report on Form 10-K, for additional
information regarding these and other risks and uncertainties applicable
to our business. The Company assumes no obligation to update any
forward-looking statement, including financial estimates and forecasts,
whether as a result of future events, circumstances or developments or
otherwise.

ABOUT WASTE MANAGEMENT

Waste Management, based in Houston, Texas, is the leading provider of
comprehensive waste management services in North America. Through its
subsidiaries, the company provides collection, transfer, recycling and
resource recovery, and disposal services. It is also a leading
developer, operator and owner of landfill gas-to-energy facilities in
the United States. The company’s customers include residential,
commercial, industrial, and municipal customers throughout North
America. To learn more information about Waste Management, visit www.wm.com
or www.thinkgreen.com.

Prior year information has been revised to reflect the adoption of ASU
2016-09 and conform to our current year presentation.

Waste Management, Inc.

Summary Data Sheet

(Dollar Amounts in Millions)

(Unaudited)

Quarters Ended

December 31,

September 30,

December 31,

2017

2017

2016

Operating Revenues by Lines of Business

Collection

Commercial

$

950

$

936

$

888

Residential

640

635

625

Industrial

653

673

605

Other

109

107

106

Total Collection

2,352

2,351

2,224

Landfill

883

884

780

Transfer

399

412

378

Recycling

310

375

338

Other

433

443

414

Intercompany (a)

(725

)

(749

)

(674

)

Operating revenues

$

3,652

$

3,716

$

3,460

Quarters Ended

December 31, 2017

December 31, 2016

Analysis of Change in Year Over Year
Revenues

Amount

As a % of

Total Company

Amount

As a % of

Total Company

Average yield (i)

$

78

2.3

%

$

105

3.2

%

Volume

91

2.6

%

64

2.0

%

Internal revenue growth

169

4.9

%

169

5.2

%

Acquisition

15

0.4

%

47

1.5

%

Divestitures

(1

)

0.0

%

(2

)

-0.1

%

Foreign currency translation

9

0.2

%

-

0.0

%

$

192

5.5

%

$

214

6.6

%

Amount

As a % of

Related

Business

Amount

As a % of

Related

Business

(i)Average yield

Collection and disposal

$

66

2.2

%

$

61

2.1

%

Recycling commodities

(10

)

-3.0

%

44

16.1

%

Fuel surcharges and mandated fees

22

18.6

%

-

0.0

%

Total

$

78

2.3

%

$

105

3.2

%

Quarters Ended December 31,

Years Ended December 31,

2017

2016

2017

2016

Free Cash Flow Analysis (b)

Net cash provided by operating activities

$

790

$

754

$

3,180

$

3,006

Capital expenditures

(528

)

(377

)

(1,509

)

(1,339

)

Proceeds from divestitures of businesses

and other assets (net of cash divested)

80

11

99

43

Free cash flow

$

342

$

388

$

1,770

$

1,710

(a)

Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.

(b)

The summary of free cash flow has been prepared to highlight and
facilitate understanding of the principal cash flow elements. Free
cash flow is not a measure of financial performance under generally
accepted accounting principles and is not intended to replace the
consolidated statement of cash flows that was prepared in accordance
with generally accepted accounting principles.

Waste Management, Inc.

Summary Data Sheet

(Dollar Amounts in Millions)

(Unaudited)

Quarters Ended

December 31,

September 30,

December 31,

2017

2017

2016

Balance Sheet Data

Cash and cash equivalents

$

22

$

35

$

32

Debt-to-total capital ratio:

Long-term indebtedness, including current

portion

$

9,491

$

9,345

$

9,310

Total equity

6,042

5,300

5,320

Total capital

$

15,533

$

14,645

$

14,630

Debt-to-total capital

61.1

%

63.8

%

63.6

%

Capitalized interest

$

5

$

5

$

2

Acquisition Summary (a)

Gross annualized revenue acquired

$

19

$

16

$

3

Total consideration

$

116

$

31

$

3

Cash paid for acquisitions

$

120

$

29

$

11

Other Operational Data

Internalization of waste, based on disposal costs

65.7

%

65.6

%

66.1

%

Total landfill disposal volumes (tons in millions)

28.8

28.7

26.2

Active landfills

249

247

248

Sites accepting waste at the end of each period presented

234

233

233

Amortization, Accretion and Other
Expenses for

Landfills Included in Operating Groups:

Landfill amortization expense -

Cost basis of landfill assets

$

106.4

$

104.7

$

93.5

Asset retirement costs

8.1

23.4

(1.7

)

Total landfill amortization expense (b) (c)

114.5

128.1

91.8

Accretion and other related expense

20.4

20.0

20.1

Landfill amortization, accretion and other related expense

$

134.9

$

148.1

$

111.9

(a)

Represents amounts associated with business acquisitions consummated
during the indicated periods except for Cash paid for acquisitions,
which may include cash payments for business acquisitions
consummated in prior quarters.

(b)

The quarter ended December 31, 2017 as compared to the quarter ended
September 30, 2017 reflects a decrease in amortization expense of
approximately $13.6 million, primarily due to changes in landfill
estimates identified in current quarter.

(c)

The quarter ended December 31, 2017 as compared to the quarter ended
December 31, 2016 reflects an increase in amortization expense of
approximately $22.7 million primarily due to increased volumes and
the relative impact of changes in estimate recorded each quarter.

Adjustments in 2017 and 2016 include impairment charges associated
with assets in the "(Income) expense from divestitures, asset
impairments and unusual items" and "Other, net" financial captions.
Additionally, adjustments in 2017 include impairment charges
associated with certain of our investments in unconsolidated
entities that are included in the "Equity in earnings (loss) of
unconsolidated entities" financial caption, and adjustments in 2016
include restructuring charges.

(d)

Effective January 1, 2017, the Company adopted ASU 2016-09 and any
excess tax impacts related to the vesting or exercise of
equity-based transactions are now recorded as a discrete item as an
adjustment to income tax expense or benefit.

(e)

Full year 2017 adjusted earnings per diluted share improved 10.7% as
compared with prior year.

Fourth quarter 2017 adjusted income from operations increased $61
million, or 9.9%, as compared with as-reported results for the same
prior year period. Adjusted income from operations margin increased
80 basis points to 18.6% of revenues in the fourth quarter 2017.
There were no adjustments made to our fourth quarter 2016 results.

(b)

Fourth quarter 2017 adjusted operating EBITDA increased $90 million,
or 9.7%, as compared with as-reported results for the same prior
year period. Adjusted operating EBITDA margin increased 100 basis
points to 27.9% of revenues in the fourth quarter 2017. There were
no adjustments made to our fourth quarter 2016 results.

(c)

Full year 2017 adjusted operating EBITDA increased 8.1% as compared
with adjusted results for the same prior year period.

(d)

The reconciliation includes two scenarios that illustrate our
projected free cash flow range for 2018. The amounts used in the
reconciliation are subject to many variables, some of which are not
under our control and, therefore, are not necessarily indicative of
actual results.